Cache Long/Short vs. Frec Long Short Direct Indexing
Published Updated
TL;DR:
- Cache Long/Short and Frec Long Short Direct Indexing both harvest tax losses while keeping you invested, but the similarity stops at the category label.
- Cache is a human-overseen, multi-factor strategy custodied at Interactive Brokers (or Schwab for $10M+ accounts at 130/30 or 145/45) with a $3M minimum and continuous leverage sizing.
- Frec is primarily automated at Apex Clearing with a $50K entry point for S&P 500-only 140/40 configurations ($100K for other 140/40 configurations) and three leverage tiers.
- The bigger differentiators: Nuveen’s Brooklyn investment team has a live track record managing tax-aware long/short, while Frec's track record is over a shorter period and Cache offers flexible funding, benchmarks, and exit paths.
- For many, fees are likely close enough that they wouldn't be the deciding factor. The right fit depends on account size, portfolio complexity, and whether you want a managed relationship or a self-directed one.
A closer look at the structure behind the strategy
If you're comparing tax-aware long/short strategies, the first pass can be easy to misread.
Cache Long/Short and Frec Long Short Direct Indexing are the two tax-aware long/short strategies built for individual investors in taxable accounts. Both run as separately managed accounts (SMAs). Both seek to generate tax loss harvesting opportunities while keeping you in the market. On the surface, they look like the same product.
Look one level deeper, and the picture changes.
Cache Long/Short is a separately managed account advised by Cache Advisors LLC, with portfolio management by Nuveen's Brooklyn investment team. The minimum account size is $3M. Assets are held in the client’s own name at Interactive Brokers; Charles Schwab is available for $10M+ accounts at 130/30 or 145/45.
Frec Long Short Direct Indexing is a fully automated SMA at Apex Clearing, with a $50,000 minimum for S&P 500-only 140/40 configurations and $100,000 for other 140/40 configurations. That's the starting point. The differences that matter show up in how the strategy is actually run, who's making portfolio decisions, how the leverage is financed, how much flexibility you get in your own account, and whether the track record reflects live money or simulations.
Here's how the two compare on each of those dimensions.
Start with the implementation, not the category
"Tax-aware long/short" is a product description, not a shorthand for interchangeable products. Two products can fit inside that description and still differ meaningfully on how they're managed.
The useful question isn't whether both products can harvest losses. It's how they're built underneath.
1. Who actually manages each long/short portfolio?
The first real difference is who's running the strategy.
Cache Long/Short is built in partnership with Nuveen's Brooklyn investment team. The program is sub-advised by Nuveen Asset Management, LLC, an SEC-registered investment adviser and affiliate of Nuveen, LLC ($1.4T AUM). Brooklyn has an experienced portfolio management and quantitative research team that advises $9.4B in tax-aware SMAs.
Cache brings the strategy to you through a modern, direct platform. SMA assets are held in the client’s own name at Interactive Brokers or Charles Schwab. The portfolio runs on a multi-factor alpha model with human oversight.
Frec's Long Short Direct Indexing is algorithmic, with licensed professionals overseeing the trading. That's still new ground for a highly leveraged strategy. You pick a factor tilt, growth, quality, or value, and Frec's system builds a portfolio around the Russell 1000, S&P 500, MSCI World ADR, or MSCI ACWI ADR accordingly. Investors looking to use Frec Long Short Diversify can only select between the Russell 1000 or S&P 500.
Both approaches are systematic. The real distinction is what the system is doing, and who's watching it.
Comparison at a glance
2. Where are your assets held, and why does it matter?
In a long/short account, custody isn't a back-office detail. It determines how your leverage is financed, what margin you can access, and how the account behaves when markets get rough.
Client assets are held in the client’s own name at Interactive Brokers or Charles Schwab. Cache does not hold client assets. Margin approval and available strategy configurations depend on the custodian and account.
Frec custodies at Apex Clearing, a custody and clearing firm for fintech companies. Its financing is disclosed as a mix of credit facilities and equity assets.
Custody and financing comparison
3. Evidence: live track record or backtested simulation?
Brooklyn's tax-aware SMA platform has been running real client money for several years, across multiple market environments. When you evaluate Cache Long/Short, you're looking at a strategy with mechanics that have been pressure-tested by live execution, borrow costs, margin calls, and tax-lot accounting in actual accounts.
Frec's long/short offering was announced in May 2025, with customer onboarding that began in late October 2025. Most of Frec's published performance material draws on backtested simulations from their white paper.
Backtests model how a strategy should behave. Confidence comes in the form of live results that show how a long/short strategy actually behaves, net of borrow availability, financing costs, and execution friction.
4. How flexible is the long/short account?
Most people don't start with cash. You probably have embedded gains, existing holdings you want to keep, and a view on what benchmark you actually want to track.
Cache Long/Short is built around that reality. You can fund with cash, concentrated stock, baskets of stocks, ETFs, or mutual funds, and you can target multiple benchmarks in the same account, blend them, and apply restrictions to what the portfolio can hold. These levers are designed to allow you to customize your Cache Long/Short strategy to meet a wide range of diversification needs. For example, you could set your strategy to 75% S&P 500 and 25% Morningstar Large Cap International ADR to gain some additional international exposure but ultimately that decision is up to you. There are six extension options available for Cache Long/Short, which range from 130/30 up to 250/150.
Frec offers a more standardized experience. The benchmarks are the Russell 1000, S&P 500, MSCI World ADR, or MSCI ACWI ADR. Extensions come in three fixed tiers. Funding can be cash, stocks or ETFs.
Portfolio fit comparison
5. What happens when you exit the long/short strategy?
A long/short program is typically a transition tool, not a permanent allocation. What you end up owning on the other side matters as much as how the strategy performs while it's running.
Cache builds for that path. The portfolio supports automated deleveraging over time, extension levels can be adjusted as your circumstances change, and the strategy is designed to wind down toward a lower-leverage or long-only posture depending on your goals and account constraints.
As that long-only portfolio takes shape, some clients use it to seed a Section 351 ETF exchange for a further tax-deferred step toward diversification — learn more about 351 ETF conversions here. Subject to availability and qualification requirements and not a recommendation to engage in any type of transaction.
6. What matters more when fees are similar?
Both platforms combine advisory fees with financing costs, and both disclose ranges that depend on your leverage level.
The decision isn't really a fee decision. It turns on long-term mechanical implications that fees don't capture: the investment process, the custody framework, how flexible the account is, and what the live track record actually shows.
If you’re looking to compare additional long/short options, visit our article: List of Tax-Aware Long/Short Providers.
7. When is Cache Long/Short or Frec Long Short a better fit?
Cache and Frec are solving overlapping problems for different investors.
Frec is a strong fit if you want a low-minimum, fully self-directed experience that's algorithmic, with licensed professionals overseeing the trading, and you're happy tracking an index with a quality, growth or value factor tilt.
Cache Long/Short is built for investors with larger balances, more complex starting portfolios, and a preference for a managed experience backed by a live track record. If you're sitting on a mix of concentrated stock, ETFs, and mutual funds, want to blend benchmarks or apply restrictions, and want your strategy run by an experienced investment team, Cache Long/Short is the better fit.
To learn about how long/short compares to exchange funds for diversifying your concentrated stock, visit this article: Two Paths to Tax-Efficient Diversification: Exchange Fund and Tax-Aware Long/Short.
The bottom line
Cache and Frec share a category. They don't share an implementation.
The structural differences concentrate in four areas:
- who manages the portfolio
- how custody and financing are structured
- how much real-world operating history underpins the strategy, and
- how much flexibility the account provides.
On each of those, Cache and Frec have made different choices, and those choices are what an investor should compare. If you're evaluating tax-aware long/short strategies, don't stop at "both harvest losses." Ask how each one does it, and what you'd own on the other side.
To see how different extension levels play out against your own numbers, try our Long/Short tax-loss harvesting simulator.
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